September 2020

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General Comment

Even bad things draw to an end sooner or later. 2020, so far, has been quite a bad year all around, and the fact that we made it till September is pretty good because it means that it will soon finish.

Yes three months are still needed to pass, but at least we are eyeing the final part of it.

September for us was another bag of mixed chocolates. Some you like some you don’t.

The good ones have to do with Leonardo, who’s finally joined kindergarten and is now out of the house most of the day. This was a major positive thing for two reasons. First he gets to spend time away from home and with different people/kids, secondly we get some “space” as we didn’t get to enjoy in many months.

I have to say that after 9 months of having to tend for the young one every day I was really on the brink of collapsing. It’s just not my thing, I love him and all, but I have discovered that I am not the “child carer” type. I will do it of course, giving it my 101% effort, but I can’t say that I was born to do it.

This re-found freedom was a bit strange at first. I wasn’t really used to it. I’ve spent the last 9 months worrying about the baby in a sort of semi-constant attention state, and not having to turn around every 5 minutes to see where Leonardo is playing was a change that took a couple of days to get used to! 🙂

The negative side is work related alas. Despite having started teaching for a school, the vast majority of my work is with American universities, and since they didn’t send students to Italy (of course) I have to consider that my earnings are going to be vastly less than last year. I’ve tried to look around but right now there is very little opportunities, people are not hiring, even freelance employees.

LH FUND

Explanation of terminology and graphs is HERE.

Let’s see the numbers:

Month	TR	YTER	NYYoC	Forex
12.14	0.00%	0.00%	0.00%	0.00%
12.15	-3.33%	1.22%	-0.13%	-1.00%
12.16	7.06%	1.14%	1.16%	-4.35%
12.17	9.94%	1.04%	2.64%	-5.94%
12.18	3.28%	1.24%	2.70%	-3.53%
12.19	23.50%	1.35%	2.72%	-1.40%
01.20	21.13%	1.36%	2.65%	-0.45%
02.20	13.04%	1.35%	2.67%	-0.63%
03.20	-5.82%	1.27%	2.51%	-0.12%
04.20	0.91%	1.26%	2.49%	-1.72%
05.20	4.68%	1.26%	2.53%	-2.14%
06.20	5.82%	1.36%	2.52%	-3.14%
07.20	3.92%	1.34%	2.56%	-5.59%
08.20	6.18%	1.33%	2.57%	-5.92%
09.20	5.50%	1.32%	2.59%	-5.45%

TR is decreasing (vs. previous month) – Markets were down in September, TR follows.

YTER is decreasing (vs. previous month) – Despite having several trades Total Expense Ratio went down by 1 BPS. Not bad! 🙂

Net Yearly YoC is increasing (vs. previous month) – 2 BPS, seems small but it’s a great result. unfortunately we are far from the 3% target, but given time I am sure it can be met.

Forex is getting better (vs. previous month) – A bit better, exchange rates are cooling down a little (well actually the Euro is).

Dividends and Options

Beginning of Fall 2020, how did it go?

September income was 1482 Euro.

Dividends accounted for 1258 Euro (-33% vs.2019) and Options ended up with a 224 Euro score (-51% vs 2019).

I knew that June was just a “fluke” with a 100% growth in dividends. After that month I have been locking in straight losses on the YoY dividend intake. This month the percentage of decrease is not modest at all, -33% it’s a whopper, and I didn’t see it coming. Well actually had I been checking last year record it would have come clear that September was impossible to recover even with new stocks and investments made, too many positions that either cancelled, reduced the dividend paid in September 2019 but weren’t here in 2020. Oh well, attention now goes to the year end result.

Options I did pretty well actually, despite having a lower result compared to 2019, but I like the fact that I am managing to give continuity to the income stream. October will prove VERY HARD because some major critical positions might need to be rolled, which means reporting losses in current accounts, but we’ll see later if that will happen…

Options positions as of end of July

DCA/Increased Positions

100 LON:SSE @ 12.50 GBP

Utility in the UK that is investing more and more in renewable energy. I wanted to increase my stake a long time ago but the price was too high at the time…

100 ORI @ 15 USD

I had 100 pieces already, got these assigned for a short put that ended up ITM at expiration. Of course I let it end like that as 15$ was a good re-entry point for me. Good insurance company in the US, dividend champion.

New Positions – Sold Position

Bought

100 NWN @ 47.99 USD

Northwest Natural Holdings is an American utility that is engaged in Natural Gas transportation and sales to its clients. It also have a division that deals with water related services. What is interesting for me is the Dividend King status (more than 50years of increases), recently this stock has gone down to a level where a first entrance became interesting (around 4% yield). The Natural Gas sector is still a puzzle to me, as the commodity price keeps going up but all the stocks that I own (NFG and now NWN) seem to go the opposite direction, clearly there is something that I am missing. Anyhow the company is stable, well run, might not grow like FAANGS stocks, but I don’t care, I’m in for that stability.

Conclusions

So how did markets do?

September brought some long due (IMHO) pullback, around 10% if I am not mistaken. I don’t think it’s enough at all, it’s clear the the real economy is showing signs of major stress due to this COVID crisis, but it’s also a well known fact that markets don’t look at Main Street all that much, and certainly they are not looking now.

Anyhow the pullback brought some valuation a bit down to earth (especially in tech stocks), and some opportunities appeared at the horizon but for me did not materialise due to the stop in the fall.

Volatility will probably be pretty high in October too, thanks to the US elections, so maybe there will be opportunities to increase some positions, it’s easier for me to sell options when the market is so erratic, although I then regret not having bought stocks once the market does take a direction.

I believe that all this bullish sentiment will probably clash with the reality of things sooner or later, some people predict a bleak 2021, much depends on when government intervention will stop of course because at that point people will not receive subsidies and unemployment rates will “matter” again.

I still keep a cautious approach to the market, call me a bear but there are too many stories that I hear/see that don’t go hand in hand with a new “secular bull market”…